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"The words of my book nothing, the drift of it everything."
Walt Whitman

With the inauguration of President Trump, I have four broad predictions about consumer protection under the new administration.

1. Federal agencies will narrow their scrutiny of businesses.

Chairwoman Edith Ramirez resigned from the Federal Trade Commission (FTC), effective February 10, 2017. Ramirez was an Obama appointee, and under her leadership, the FTC stepped up its enforcement activity to protect consumers. On January 25, 2017, President Trump announced that he was appointing Maureen K. Ohlhausen as acting Chair. Ohlhausen has objected to FTC investigations that impede business with “overreaching” discovery. In accepting her designation by President Trump, she said, ” I will ensure the commission minimizes the burdens on legitimate business as we carry out this vital work.” Ohlhausen’s appointment suggests we may see the FTC narrowing its interest in consumer protection. The FTC may limit its focus to those campaigns that have dramatic economic impact. In addition, in pursuing “unfair” commercial speech, Trump’s FTC may re-examine the definition of what is unfair. President Obama’s FTC constantly balanced innovation with its negative impact on the consumer. President Trump’s FTC may be less interested in finding that tipping point.  In short, FTC enforcement priorities may change.

Other federal consumer protection agencies may also switch to a pro-business stance.

  • First, due to pending litigation (PHH Corp. v. CFPB (D.C. Cir. Court of Appeals October 2016), President Trump may be able to remove the current director of the Consumer Financial Protection Bureau before his term ends in 2018. We can expect a less aggressive consumer protection agency under a Trump appointee. Furthermore, the current CFPB had proposed a prohibition on arbitration clauses containing class action waivers. This regulation seems less likely to be enacted in the Trump administration.
  • Second, the Federal Communications Commission (FCC), which had worked to strengthen consumer privacy under President Obama, may reverse or change course. ISP’s may find themselves with increased ability to monetize their access to consumer/user data. In addition, whereas President Obama’s FCC focused on net neutrality, the pendulum may swing the other way.
  •  Third, The Consumer Products Safety Commission (CPSC) receives bi-partisan support in its efforts to protect children. It is unlikely, therefore, to shift its priorities. At the same time, we may see new appointees, lower financial fines, and perhaps even less federal funding for the CPSC’s efforts. On January 19, 2017, Commissioners at the CPSC elected Anne Marie Buerkle to be the next vice chair. She would take over as Acting Chair should current CPSC Chair Kaye step down or is asked to leave. Buerkle has opposed openly the CPSC’s proposals to increase civil penalties and modify the voluntary recall program, among other initiatives.

2. State AG’s will broaden their approaches to consumer protection.

At the same time, state attorneys-general will pick up the regulatory baton that Ramirez’ FTC and other federal agencies threw to them under President Obama. In particularly progressive states, for example NY, California, or Massachusetts, we are likely to see an increase in regulatory attention to commercial speech that dupes consumers. The result may be a hodge-podge of regulatory activity that is more fragmented than it was under President Obama.

3. The NAD will take an activist role in policing commercial speech.

The National Advertising Division of the Council of Better Business Bureaus (NAD) is part of the advertising industry’s self-regulatory system. Advertisers may challenge their competitors’ campaigns before the NAD, or the NAD may bring its own independent investigations. Historically, the NAD has taken an active role in curtailing advertising that may confuse or deceive consumers. Industry members frequently comply with the NAD’s recommendations, even if they do not have rule of law, either because the NAD may refer matters to the FTC, to avoid further litigation, or to preserve their reputations with their customers.

Under a Trump administration, the NAD is likely to re-commit to protecting consumers. Given their desire to promote “an honest and open playing field in advertising,” NAD will continue its work to demand proper claim substantiation from advertisers and ensure that consumers understand that they are interacting with advertising materials. Native advertising will continue to be a point of interest for NAD, and consumer products will remain high on their watch list.

4. Change Takes Time, but smart marketers will use their time wisely.

Even with a Republican dominated Congress, the Trump administration can only move so fast to change courses. Agency rule-making commonly takes years. It is unlikely that President Trump will be able to make the bureaucracies move much faster. If President Trump only serves one term with a Democratic successor or if the Democrats prevail in the midterm elections, his effect on consumer protection may be short-lived. Nonetheless, businesses that want to stay ahead of the curve will  prepare. They will consider the possibility that their marketing campaigns may remain under scrutiny. For national advertisers, the trend towards more local enforcement will likely require more significant legal vetting of campaigns. Local business owners also should be watching the political landscape in their states to determine what resources they need to ensure their advertising and marketing campaigns do not invite regulatory scrutiny.

 

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DMCA Update: Act Now to Maintain Legal Safe Harbor

by kbhilfer on December 1, 2016

The US Copyright Office’s new regulations on the Digital Millennium Copyright Act (DMCA) go into effect today December 1, 2016. In order to maintain a website’s valuable DMCA safe harbor protections, service providers must conform to the new requirements.

Background

The DMCA amended the Copyright Act to address, among other things, situations in which Internet users upload infringing content to websites and other online services. The DMCA created a “safe harbor” that allows online service providers to avoid liability for hosting infringing content uploaded by users. To do so, they must implement a notice-and-takedown procedure. In this way, copyright owners can submit a notification to the online service provider that  content on the website infringes the copyright owner’s rights. By acting promptly in addressing such notifications (e.g., removing allegedly infringing content), an online service provider can avail itself of the DMCA safe harbor.

Since the DMCA’s inception, the Copyright Office has maintained a directory of service providers’ designated DMCA agents. That directory was a compilation of one-time filings by the service providers. While the onus was on the service provider to keep its designated agent information up-to-date, the Copyright Office’s directory was nonetheless somewhat outdated. The Copyright Office instituted its new electronic filing requirements to improve the accuracy of its directory. Under these new regulations, it will no longer accept paper filings.

The DMCA in the News

The DMCA made headlines in recent years because of the ongoing battle between plaintiff Stephanie Lenz and defendant Universal Music Corp. Lenz had uploaded to YouTube a twenty-nine second video showing her toddler bopping happily in her kitchen to Prince’s song, “Let’s Go Crazy.” Starting in a rural kitchen in Pennsylvania, the case is now a landmark decision in copyright law that protects many home videographers from DMCA takedown notices. The case stands for the proposition that before a copyright owner issues a DMCA takedown notice, it must consider whether the alleged infringement really is a fair use. If they subjectively believe that there is no fair use, they may file the takedown notice.

Currently, the Supreme Court is considering whether to grant certiorari and hear an appeal of the case. Lenz argues in its petition that to issue a DMCA takedown notice, there should be a reasonable not subjective belief that there is no fair use.

Updated DMCA Requirements

Regardless of what happens in the Lenz’ battle concerning fair use and the DMCA, online service providers must comply with the Copyright Office’s new regulations or lose their protection under the law. In order to commence or preserve DMCA safe harbor protections, online service providers should take immediate steps to:

  • Open a Copyright Office account
  • Appoint the company representative and DMCA agent online. Significantly, under the new regulations, the designated agent can now be a department or even a law firm.
  • If you already have designated a DMCA agent, you have until end the end of 2017 to do the online designations.
  • Create a reminder system internally so that every three years you either update or renew the DMCA agent designation. Once you update, the three-year period will start again from that filing date.
  • File through the new system by December 31, 2017, even if you have registered before, to maintain your DMCA safe harbor protection.

 

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Legal Reasons to Make Sure Consumers Understand Your Advertising Disclosures

October 5, 2016

We’ve all seen the fine print in advertising, but do we, as consumers, read or understand what these disclosures say? This inquiry was the focus of the FTC’s recent workshop “Putting Disclosures to the Test.” The consensus was that consumers neither read nor understand many disclosures. At the same time, the workshop suggested some best […]

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Hot Legal Issues for Marketers Summer 2016

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It’s August, and brands are heating up their summer campaigns and preparing for fall, Marketers tend to jump on prominent news stories and seek relevance by reacting to them. In so doing, they may run afoul of trademark laws or regulatory compliance issues. The season also brings retail challenges, as bricks and mortar stores try […]

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Native Advertising Legal Analysis and Practice Tips

July 21, 2016

Advertising that feels and looks like editorial platform content has existed for decades. In the age of social media, however, “native advertising,” as it is now often called, has become more confusing. Brands have become more sophisticated at disguising their advertising messages within the editorial content, making it more difficult to differentiate commercial speech. The […]

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Food Law: Advertising & Marketing Concerns for Food Entrepreneurs

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From food subscription services to mobile food trucks, food is on the go, liberated from traditional kitchens. Food law has grown with this thriving industry. For food entrepreneurs launching or growing their businesses, here are ten advertising and marketing law issues to consider. Trademark. Your food is your product, but your brand name is your […]

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SURTEX Attendees: Legal Tips for Art Licensing Deals

April 21, 2016

If it’s May in New York, it’s time for SURTEX. If you are an artist who licenses your art, you should be planning a trip to New York for the self-proclaimed “marketplace for original art and design.” The SURTEX show can be daunting for newcomers due to its size and scope. While your focus now may be […]

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Legal Problems for Franchisors in Social Media

April 4, 2016

Social media content moves swiftly and sometimes even the best marketing teams make mistakes. Those mistakes can come back to bite a franchisor, hurting its reputation and even causing legal issues. Examples of Social Media Crises: In October 2016, KitchenAid USA’s tweet feed included a tweet responding to one of the US Presidential debates. The […]

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FTC Assault on Lord & Taylor Follows Viral Product Bomb Campaign

March 25, 2016

Industry members were surprised to see swift enforcement of the FTC’s Native Advertising Enforcement Policy, disseminated in December 2015. On March 15, 2016, the FTC announced its first consent order under this policy. Retailer Lord & Taylor (L&T) had run a highly successful social media “product bomb” campaign in March 2015 to launch its apparel […]

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How To Keep Your Native Advertising Legal

February 26, 2016

The FTC’s recent guidance on native advertising reinforces that transparency and disclosures are important for avoiding consumer deception. Consumers may be confused by advertising that feels and looks like an editorial platform. They cannot always tell who is responsible for the message. The FTC wants to make sure that consumers know when they are looking […]

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